Aaron Orendorff on iOS updates, discounting in DTC, and why It’s still Google’s world
Look up “ambition” in the dictionary, and—no. Somebody get his red pen. Aaron Orendorff would never endorse such a cliched opening line.
Indeed, before he became an executive and a thought leader, now vice president of marketing at the eCommerce agency Common Thread Collective, Orendorff was a content strategist and the longtime editor in chief of Shopify Plus’ content marketing efforts. God help the writer who should try to sneak such an eye-roll of an opening salvo past him.
Today, Orendorff is as in the weeds as he’s ever been, his hands in high-level eCommerce strategy as much as they are holding reams of ad spend data that he’s made a career detailing, decoding, and deciphering about as good as anyone else.
From his home in Portland, Ore., Orendorff discusses how eCommerce brands are navigating the ongoing global shipping crisis and the absolute dos and don’ts around Facebook ad tactics in the wake of this year’s iOS updates, and what direct-to-consumer (DTC) companies miss about content strategy. “What they get wrong is trying to become a media company,” he says. “[Brands say], ‘We're a publisher now. We're creating a print magazine.’ No. 95% of eCommerce SEO means, ‘Go get your code straight on your website.’ People just get seduced into this thing of, like, somehow we're going to be the next Glossier, and [they] forget it is so rare that that even works.”
(This interview has been edited and condensed for clarity.)
Banknotes: Apple’s iOS updates sent such turbulence through the eCommerce world this year, most notably because of ongoing access to customer data and a flood of changes to Facebook Ads Manager. What are the most important things brands have had to change because of this?
Orendorff: Number one, they're finding ways to triangulate in-platform data with outside of platform data. And that's not happening through something like Facebook's conversion API, CAPI, which is still Facebook-led. It's a little bit better than the data you get directly from the pixel. But it's not the answer. And many people try to sell that as the answer or some cleverly designed version of it.
What they're doing is, they're saying, “Okay, let's create baselines. Let's triangulate Facebook ROAS (return on ad spend), with last-click Google attribution, with a post-purchase survey.” The leading indicators are still ads themselves, the same things we look for in making a successful ad. Impressions divided by three-second views to identify how many people the ad stopped. What's the watch time on it? What's the click-through rate? And then, what’s the actual return? So we're still measuring the leading indicators on the ad level, but we’re finding ways to triangulate the data loss.
Because they're trying to answer the question: Are ads working? And they're looking for ways to say, “Let's create a pre-and a post-baseline from Google last click, from multi-touch. Let's go into post-purchase surveys. And we've got to find out if it's working or not.” Because we know that if we just pull back spend off of Facebook or any other platform because every platform is affected by this, when you pull back spend, you pull back revenue. That's not a viable answer.
Banknotes: What is now the cardinal sin relative to the iOS updates brands are still doing that officially no longer works?
Orendorff: Single account ROAS targets. People want to be able to say, “I need a 5 on Google. I need a 2.5 on Facebook and a 1.5 on TikTok.” Single account ROAS targets have always been a shitty way to measure things, and they are borderline worthless now. They’re so sexy, and people get so caught up in them. They're so easy to translate, [but] they hide so much bad stuff.
Banknotes: The global shipping crisis is no longer niche industry news—it was just on “60 minutes” in November, so this has obviously become a wide, far-reaching business that the general public even has an interest in now. Do you see eCommerce brands you work with being priced out of access to reliable shipping? How do you see this showing up most?
Orendorff: The place I see it most is inside the brands that we ourselves own. Particularly Slick Products. They sell off-road ATV wash, and their number one selling product is a foam cannon that you hook up to your hose and spray. They simply did not have stock during the summer months.
So everything was a race to figure out: Is there anything else we can sell people? Are there any new funnels we can create? We can't sell our best seller because we don't have it. Can we run presale offers on the next [inventory] runs using urgency? Can we sell bundles of just the washing bottles themselves? One of the things they did that was genius was, the most visceral experience you have during the wash process is the Shine you put on last. So they created, out of necessity, a funnel that just sold people multiple bottles of Shine. And it was an idea of: We get the most glowing reviews on this [product], so let's just see if we can sell that at a lower AOV (average order value), higher conversion rate, and acquire more new customers to sell the staple products to once they’re on board.
[The shipping crisis] is forcing people to get creative about their offers. And to invest in high touchpoint customer service, or at least high touchpoint transactional emails [to inform customers about] delays. The [brands] that have fared best are the ones that have almost a public face type of person who reaches out via their email list just to let people know what's happening.
Banknotes: Let me ask you to put on your forward-thinking cap here and make a prediction for us. If inventory management was the defining issue for eCommerce brands in 2021, what do you think will be for them in 2022?
Orendorff: I’d probably put money on [supply chain challenges] being the continuing issue carried over. It’s just gonna get gnarlier.
But you can't overstress the need for product innovation, product mix and hedge your bets in that way because product innovation and product mixes are one of the hardest things to do. Especially for DNVBs (digitally-native vertical brands) that grew up with one central product. One of our clients sells organic tampons and pads, menstrual needs [products], and they've created an entire digital community around that. And they sell a subscription service to that. It’s a high margin offset, so they can now afford to spend more on customer acquisition because they're thinking outside of just traditional physical products.
Also, margin constraint is going to get nothing but thinner and thinner and thinner. And so the inability to make more ongoing money off the customers that you get is gonna be a game-changer.
Banknotes: Black Friday, Cyber Monday (BFCM) just passed, and you are again intimately charting what this means for eCommerce brands. From everything, Common Thread sees and hears, what is the thing that the best brands are doing now to have the best Black Friday results?
Orendorff: They're leaning as hard as they possibly can into average order value.
You can make money with a sitewide discount that doesn't necessitate a coupon. If you layer that onto your best products that you actually want customers to experience, bundle them in a few [price points], and then put your deepest discount on those. Naturally, your most expensive products should translate into the products that give people the most value.
So [you’re telling customers], “if you really want to save money this Black Friday, this is the way to do it, this is the thing to get.” And then there's maybe two lower tiers to that, or you have cycling landing pages of, “We're gonna have this one staple, where if you buy these three skin products, you get 40% off instead of the sitewide 20% off. So we're going to try to drive more people to purchase that.”
There’s also a gift with purchase and in-cart upsells—going as hard as you possibly can. But that goes right back to the AOV thing. [Offering customers] a high-value product if they buy a bundle, or selling them mystery gifts at checkout, or [spending] thresholds: “Hey, you're $5 away from unlocking 25% off instead of 15% off. Here's a suggested product to get you right over that line.” That experience gets people to come back later,
You're able to lower shipping costs because it’s exponentially more expensive to send two packages than one. So I'd rather have one customer that buys slightly more than two customers that buy the same. Even if I lose out in total volume, I'm still winning on the margin front because it's less expensive to get into my customers’ hands.
Banknotes: You talked about a lot of discounting in your answer just there. You shared a thread recently on Twitter about discounting in DTC and its impact on profitability, pricing power, brand reputation, etc. I think about this in two ways. One, we’ve seen companies like Pura Vida do discounting very often and very well—heavy on Black Friday sales, email signup discounts, bulk discounts, you name it. But then you have people like Ariel Kaye, the founder, and CEO of Parachute, who runs exactly two sales a year and swears there’ll never be more. She told me that once you enter the relationship of discounting with the customer, you can never back out and maybe never get them to pay full price again.
What is the right balance you like to see a DTC brand have with discounting?
Orendorff: The boogeyman of [losing] brand equity around Black Friday, Cyber Monday, I personally believe, is simply a boogeyman. You can get away with discounting during Black Friday, Cyber Monday—even someone like Parachute because it’s such an expectation [that brands go on sale then]. You know, Away had to do their first sale ever last year, and it smashed. Does that mean [customers] are gonna probably wait around to see if they get another sale? Yeah, definitely. I am.
But I think about what we call the “four peaks theory marketing calendar.” Every brand, by nature, typically has two peaks out of the year. One of them will be Black Friday, Cyber Monday, and the other is a second major holiday—like Mother’s Day, Father’s Day, Memorial Day.
One of our clients, Athletic Propulsion Labs, discounts during BFCM, pushes hard during back to school, and then they make another big sale for International Women's Day every year. It's because they've associated themselves with this cause that their customers care about. Also, they still have exclusivity around it where, if you miss it this day, you're not getting another discount until way later. Outside of that, they cycle through new product releases, different colorways, and product drops. The effect is to drive growth throughout the entire year.
There are other ways to do it that are savvy and almost hidden behind the larger product releases. But to build something around, “What's another cultural moment we can hang our hats on? And what's the most natural time for our customers to be looking for something new?” And then that's when we're gonna push really hard on product releases during that period of time creates four moments throughout the year.
Discounting can easily be associated with three out of those four and discounting, especially four out of four, as long as you're doing it as a way to offload inventory. You can run ads specifically that most non-customers don't see, or you can send emails to just certain segments of your list when you still need to get rid of the inventory. Give the people who are never going to buy from you anyway a chance to finally have an excuse to do it.
Banknotes: Okay, so these are the principles of discounting for kind of the top 1% of eCommerce brands. What if I’m a company that’s just emerging, and I really need discounting just to get customers in the door for the first time? Is there a maximum amount of discounting you might warn against exceeding?
Orendorff: It depends on where you've priced yourself in the market because that's when it becomes dangerous. Like Pura Vida and Fashion Nova can break all the rules, and they get away with it because that's what their customers expect. [Discounting] doesn't devalue their brands because of the price point that they put themselves at, anyway. It’s fine. Whatever their margins are, they can go lower and figure out the finances behind it.
There are ways to discount without discounting. Gift with purchase is a really good one to drive average order value. Or only giving discounts on certain bundles or certain SKUs, and to never discount recent releases. So there's not like a magic number. It's a lot more about, “What's your position in the market as reflected in your price point?” And then, “How can we find ways to give your customer more value without [offering] pure percentage or dollars off?”
Banknotes: You also tweeted recently about this new collaboration between Adidas, IVY PARK, and Peloton—the rarely seen three-brand partnership. What excited you was how all three brands marketed the collab together in unison. What are the things a brand should know about approaching the idea of a collaboration with another company in a similar space?
Orendorff: I think Reddit and closed Facebook groups—if you're not already a part of whatever subreddit your industry services, that's where you'll find the brands that people love and hate. And that's the best customer research ever to try to find opportunities inside your vertical or adjacent to your vertical.
And then go looking for [a collaboration partner] who you could say, “If I send a sales email about this product, I a) won't cannibalize any of my own sales, and b) I know my customers in the Venn diagram of these two overlap. One of the great [collaborations] I saw earlier this year has been Born Primitive and QALO, the silicone rings. And that was just like a no-brainer. They got two CrossFit overlaps. There's zero competition in it. And it's essentially if they share their email list, they're both going to make more money. So it made all the sense in the world to do something like that.
Banknotes: Adidas, IVY PARK, and Peloton obviously traffic in rarified air. For eCommerce brands that are less mature with less brand awareness, is there a different set of rules for how to pull off a successful collaboration when you don’t have ten-figure ad budgets at your disposal?
Orendorff: Yeah, especially to sharing email [lists]. This is one of the easiest ways to do this. And all you really have to do is create co-branded marketing materials and typically a co-branded landing page. And it's even better if you can do it with micro-influencers or do some influencer seeding, some gifting out into the world of both your products together, which makes for a nice, more robust unboxing experience and often leads to organic shares.
And you can do this at scale. Collaboration doesn't mean, “Let's actually create a product together.” That's the place where I think a lot of people still misunderstand. It can simply be complementary products. And we won't cannibalize ourselves if we sell something else or if we create these referral programs. We’re just gonna market to the same people.
Banknotes: Your agency works with eCommerce brands in the $10-$50 million sweet spot of revenue. Where do most emerging eCommerce brands need help where they might not even know they need help yet?
Orendorff: There are two inflection points. The first takes place typically between $5-$10 million, where if they're a true DTC DNVB, and they've grown up through the last, let's say, three years particularly, they experienced massive growth in 2020, which, across the eCommerce landscape, that's what was happening. That usually meant they had a flagship hero product that fit the market well. And they scaled on the back of product-market fit, and maybe one paid ad channel, or they dabbled in one paid ad channel.
But if it's founder-led, that means they simply haven't had the bandwidth yet to really wring the Facebook sponge out. There's still plenty of juice to that squeeze, and they simply don't have the capacity yet to develop or hire in-house. But they know that they're leaving a lot of money on the table regarding paid acquisition and new customer growth. And because things have gotten so much harder recently, the barrier to entry when it comes to efficient paid spend—profitable paid spend—is far higher than it used to be. That's that first, where somebody needs to grow their paid marketing spend or channel mix essentially, and really bring in somebody who can scale ad spend and scale ad spend profitably [by] a meaningful amount.
Most of our new clients in 2021, in particular, are far more at the high end of $20-$25 million [in revenue] or beyond. And for them, what it's really about is either they’re legacy retailers who are waking up to DTC, and they simply don't know what that landscape looks like. Or they got funding, but they need somebody to fast track the ramp-up in paid media, retention, email, and SMS marketing. “How do we play the spread across Google? What do we do for Amazon? How do you run TikTok campaigns or microsites?” There are all these very big, scary questions around them. And they need to be able to move fast. That's one of the things we provide.
Banknotes: Common Thread Collective advises three key segments of businesses, and you list them outright on your homepage. Let’s take this one by one: What is the biggest challenge facing a founder-led business that's just getting to that $5 million-plus range in revenue?
Orendorff: Forecasting [and] scaling spend at the brink of profitability. Like right on that edge [of profitability]. That's really what it comes down to, is those ingredients.
Facebook had gotten so much better at its algorithm. Pre-iOS 14, and the whole shadowing of data, the reporting haze that has settled upon it—it had gotten so much better at finding the customers you want with a seasoned pixel. And if you don't have a seasoned pixel, you can decimate your business trying to season it, trying to teach your pixel who to go out and find that is likely to buy your product. And so there's a lot of savviness that comes into: How do you build the most effective campaign structure? That's a lot of this work. What test should you be running for the highest impact? What angles should you be testing? And how do you rapidly iterate on creative?
Banknotes: How about the second bucket? What is the greatest challenge facing an eCommerce brand that is scaling to $10-$50 million in revenue?
Orendorff: They've mastered acquisition at the brink of profitability, but what they don't know how to do is understand the value of customer cohorts and how to build specific funnels and a holistic strategy. There's still such a black box around LTV (lifetime value), and there's demand in the market for people wanting to understand customer lifetime value. But one of the phrases we started here is, “You'll die waiting a lifetime.”
To be able to show people, “These are the SKUs, the exact products that—whether it's; however, they perform on the front end in prospecting or remarketing—what is the customer value by SKU so that you now know, I'm going to make 30% more [revenue] in the next 60 days if I sell to Customer X instead of Customer Y.” Breaking that sort of cohort-specific understanding and applying it to the business at large, to product development, and especially to the paid funnels across Google, Facebook, and the other channels, but also to email marketing to say, “I first have to understand what those SKUs are, what the moments are that bring in more valuable customers, what the bad moments are, if we get a discount customer, do they spend less over time if we sell more products in a first purchase or less products in a first purchase, how does that affect [the relationship]”?
You want to create a really solid, almost like a layered revenue cake where the foundational layer is existing and returning customers. We have to understand how they behave, so everything else can be built on top of that.
Banknotes: And the last one. What is the biggest challenge facing a legacy retailer that is just now breaking into eCommerce and direct to consumer?
Orendorff: Finding a partner who can speak the internal language of things like shareholder value or enterprise marketing return, who can translate the cash flow [profit & loss] considerations of those [smaller revenue] bands that we discussed into something that makes sense in the boardroom. That translation and understanding of the longer horizons you have available to you—and the limitations you can sometimes have with longer horizons and more money. There can be greater scrutiny if you go this DTC route. Somebody is putting their neck on the line. [Sometimes] they're part of an innovation team, or they're incubating multiple brands inside of a legacy retailer, or they're acquiring brands.
And they really need to understand the brands that we're looking to acquire. “How does this impact the overall business? How does this not negatively affect our retail and wholesale partnerships? How do we navigate that?” So there's politics to it.
Banknotes: There was a phrase I saw on Common Thread’s site about your client onboarding process that was interesting. It said, in parentheses, “as long as our team gets necessary access”—talking about, in essence, a brand opening up its books to you. When you are digging deep on an eCommerce business, what are the warning signs you find that tell you a company is in disarray?
Orendorff: This is probably the most honest answer I can give. Right now, pre-iOS, 14.5—so from June earlier—the average eCommerce ROAS across all of the businesses we have access to (Common Thread Collective clients and non-clients) was a 2.13. Now, the average Facebook ROAS across those same businesses is a 1.48, which means if somebody comes [to us]. They need, for example, a three or four ROAS or above on their Facebook to survive, to make the margins work; that is a recipe for disaster, even if you have the money to give us. Really.
It's margin constraints that are the biggest issue, not just the COGS that go into it, which have got harder and harder as labor has gone up, supply chains have got slower, fulfillment has got more expensive. If the average ROAS goes from a 2.13 to 1.48, there's still plenty of people cruising along—they're winning. But if you have to get that to win, that's incredibly dangerous.
Banknotes: Okay, so that's the dangerous side. What's the other part? What's the thing, when you get a look at a company’s books, that makes you say, “Oh, actually, they have their affairs in order here.”
Orendorff: If they have a 60- to 90-day LTV of 30% or more, the average order value of the first purchase increases incrementally by 30% within 60 to 90 days, depending on the product type, we can run wild with that.
One of my favorite illustrations of that is a client we’ve got right now who sells flashlights and knives—they're all outdoorsy, pretty high-end stuff. And you'd be like, “Once you buy this durable flashlight, there's not gonna be that many opportunities to sell.” Yet their LTV is phenomenal. And it's because they created their own brand of batteries.
When I was looking at their account, [I thought], they should not be able to do this. But they found a way. And as soon as you say it out loud, you go, “Oh.” And now they've got subscription offerings. So it's looking for that margin innovation and LTV innovation that means, “Okay, now we can scale this.”
Banknotes: Content marketing is the thing you are known most for in your career. Your business, iconiContent, has the tagline I still remember today: “Saving the world from bad content.” What are the things that eCommerce brands get right and wrong about their approach to content?
Orendorff: What they get wrong is trying to become a media company, which is a delightful buzzword, in ways that simply aren't native to their customer base. I mean, blogs are just the be-all and end-all, no matter what you call them. [Brands say], “We're a publisher now.” Or, “We're creating a print magazine, too!” The outliers are so few and far between eCommerce brands that can do written content successfully, and yet they continue to think, “Oh, that's what SEO means, is I've got to create a blog.”
No. 95% of eCommerce SEO means, “Go get your code straight on your website, and beef up your product pages and collection pages with more words that are both for humans and bots.” People just get seduced into this thing of, like, somehow we're going to be the next Glossier, and [they] forget it is so rare that that even works.
Thinx has a great blog, but they run it so that anything that goes out on their blog has social assets that go out with it, [along with] email and paid advertising. Tracksmith is another one that I'm always just in love with because they do long-form written content—but it's beautiful. And it's connected with their product releases and their product drops. And it lends itself to the running community because there's long-form storytelling in there, but you better believe they're building out all of these paid assets and video assets. They're creating this cache so that they get way more bullets to try in the accounts than anybody else.
The real big upside is that content is just an organic extension [of the brand]. It's just an add-on. And you've got to create [content that solves], “Where are my people? Where are my customers most often?” ‘Cause, that's where we're gonna invest in content. And anything else that you do is just gravy on top of that.
Banknotes: You recently talked about the new Allbirds trail running shoe, which included an announcement about a partnership with AllTrails. This was a terrific example of content and commerce working as one. Who in your mind is the eCommerce brand doing the marriage of content and commerce the best today?
Orendorff: What’s so clever about that Allbirds illustration is you don't think of it as content. [They said], “We're gonna create a curated guide within an app for trail runners. We're gonna collab and partner with somebody our market already knows, likes, and trusts.” It's just so not what you expect when you think of content and commerce.
But that's how people are consuming the content. And it adds to their experience and exposes you to more people because of that collaboration and being inside the app. And it's great for email content. I'd be shocked to find out they weren't running paid campaigns around it, as well. Maybe not pure customer acquisition, but oh, my goodness, it was such a savvy example.
Allbirds, they're my favorite, too. One of the things when they announced their carbon-neutral policy for Earth Day—this was a year or two years ago now—they had the email that went out, they had the microsite, the T Brand Studio page that was just the most glorious, beautiful thing you've ever seen with all these different birds. They just do such an immersive experience when they approach content. And [the pairing with AllTrails] is just the latest installment to partner with an app.
Megan Thee Stallion with Nike! Did you see what they released on their app engagement when they did Megan Thee Stallion videos? Nike is so smart at this stuff. And you think they're smart because they do these big, splashy ad campaigns. But they partnered—and not everybody could partner with Megan Thee Stallion, I get it—but they did in a way by not putting her on a billboard. They got her to do workouts inside the [Nike] app. And the engagement and the retention were so sick.
Banknotes: You’ve become a master chronicler on the relationship eCommerce brands need to have with their own SEO. What are the most important things a company needs to do—the table stakes—to succeed at SEO today?
Orendorff: You've got to dig into the guts of your code. Most eCommerce stores, especially sub-$10 million [in revenue], and sometimes even higher—have just garbage code that looks good on the front end but does not respect the conventions that Google pays attention to.
The differences between, “What code is an H1 [heading], H2, H3, H4, H5? What's body text? What's bold? And are there alt image tags on it? And is that code clean?” And it's usually not. It's just because it looks good on the front, and most people aren't savvy enough to [fix it]. Investing in technical SEO is the first thing anybody should do. Don't make your site look any different. Don't do any link building. Nail that on your collection and your product pages. Find the collection pages and the product pages that have the most organic traffic, to begin with, and go after those to double the amount of words on those pages.
That’s it. Get the code clean, and then double the amount of words that are on the pages. And if you partner with somebody that can write pretty decent copy, it's fine. You can have a long-ass page at the bottom. None of that really matters. You’re just trying to get more organic visitors. You should write more. The more words—it’s still freakin Google's world, and we live in it when it comes to organic search. And Google likes words.
Banknotes: A few rapid-fire questions to wrap up. If I’m from a brand looking to ramp up user-generated content to help market my products, what do you advise companies like this to do?
Orendorff: The absolute best way to get more user-generated content is to seed products with micro-influencers with no strings attached. There are plenty of apps that can help you do this. There are agencies other than Common Thread Collective because we don't do this.
But that's the key to unlocking user-generated content. You just have to get the product into micro influencers’ hands with 5,000 to 25,000 followers. Give it to them for nothing, make it a great unboxing experience, and then if they post—there are programs you can use to monitor this—if they post, you reach out. If they make good content, you go to creator licensing the ads, that sort of thing. Then you create your partnerships from that organic soil outward.
Animalhouse Fitness unleashed a barrage of user-generated content, and it exploded. And it was all because they were doing this systematically. They had so many freakin’ bullets to shoot for content; they just came out swinging. That's because of this approach.
Banknotes: We hear all the time about “building brand loyalty” without a lot of direction on how to do it. What do you tell brands about this?
Orendorff: Community is such a wonderful buzzword. My hot take on that is, “No, don't build community.” Go to the communities that your customers naturally gravitate towards—clubs, Facebook groups, subreddits, IRL gatherings—and serve them. Be an active presence in those places. It's a far better, more effective way to impact those communities. Go there to serve, and that's how you invest in community.
Don't create it. Be a part of it.
Banknotes: Last one. You’ve been vocal a lot on Twitter about NFTs and their intersection with eCommerce. Where do you see this going?
Orendorff: I do very much believe in the future of NFTs and eCommerce. I think that’s gonna be one of the major margin alleviators that [brands] are not too late on. You start working now.
The ability to free up your margin and increase brand loyalty—that's a really strong one. Especially the new flex in digital environments. And it's only becoming more so as the dividing lines between gaming communities and social media continue to disappear. As soon as you're able to carry that between worlds, then you're gonna kick yourself for not having started in 2021.